New development: Transparent impact reporting in charity annual reports—benefits,challenges and areas for development

The effect of charitable activities on beneficiaries and society is at the heart of what charities exist to do, and stakeholders’ reasons for engaging with charities. Reporting publicly and transparently on this impact can form the basis of improved effectiveness, accountability, legitimacy and trust: potentially securing stakeholders’ ongoing support and engagement. However, significant challenges to transparent impact reporting are also acknowledged. This article explores these possible benefits, and challenges and highlights areas for development in practice and research.     

A Sorting Model for Group Decision Making: A Case Study of Water Losses in Brazil

Many water supply systems in Brazil have serious problems related to the high index of water losses, which provokes financial and environmental impacts. This is an immediate consequence of an inadequate maintenance plan, allied to natural and budgetary constraints. In addition, in these types of problems it is commonplace to consider the opinions of many managers, such as those from the operational, environmental and financial sectors of Water Companies. In view of this, a sorting multicriteria model to support group decision making is developed. We proposed an approach which sorts the areas of the system which are located in critical zones of water losses into categories, and which takes into account different points of view and considers uncertainty in criteria weights by using only ordinal information, so as to make it viable to manage the maintenance plan and to use the scant financial resources more efficiently. The SMAA-TRI method is used to tackle the group sorting problematic by categorizing the network into zones where losses are intense and thus to focus the managers’ effort on the most critical regions. A case study in Brazil is presented to demonstrate the efficiency of the approach proposed.     

Ensuring Independent Auditors: Increasing the Saliency of the Professional Identity

We conceptualize threats to auditor independence as conflicts of social identity rather than interest and hypothesize that the greater the saliency of the professional identity among auditors, the more likely the auditor will engage in independent decision-making. Furthermore, we assert that saliency of non-professional identities and weakness of the professional image threaten independence. We hypothesize that a return to the traditional will relate positively to the saliency of the professional identity among auditors and ultimately, to independent decision-making. Actions for re-establishing the external image of the profession are drawn from historical references to the traditional image.     

Australia Demonstrates the Rise of Populism is About More than Economics

Votes for established centre‐right and centre‐left political parties are falling across the developed world. Australia is not immune from this trend: in the 2016 federal election, more people voted for minor parties than at any point since the Second World War. Australia is an interesting case study for the rest of the world on the origins of populist support. Political scientists have struggled to separate the effects of cultural shifts and poor economic outcomes (low wages and rising inequality) in many countries because these shifts have occurred simultaneously. However, in Australia the economy was relatively healthy during the period of rising minor party support. Our analysis suggests that falling trust in government and a backlash against the pace of social change explain much of the collapse in support for the political mainstream.     

Board meetings,committee structure,and firm value

In this study, we examine the determinants of board monitoring activity and its impact on firm value for a broad panel of firms over a six-year period from 1999 to 2005. During this period, Congress and the exchanges promulgated regulations that increased pressure upon firms for more independent and active boards. Economists have debated whether board activity and externally imposed regulations benefit or harm firms. We develop and examine several proxies for board monitoring and examine the relationship between board monitoring activity, firm characteristics, and firm value in a structural equation framework. One set of our proxies is based on the number of annual board and Audit Committee meetings. We show that prior performance, firm characteristics and governance characteristics are important determinants of board activity. We also show that the board monitoring is driven by corporate events, such as an acquisition or a restatement of financial statements. We find that board activity has a positive impact on firm value. Our results also indicate that the external pressure has had a salutary effect and recent regulations have led to some increase in firm value. A second set of proxies is based on the shift to a fully independent Audit, Compensation and Nominating Committees. We find that firms increased the independence of these Board committees following the enactment of the 2002 Sarbanes-Oxley Act.     

COMMERCIAL BANK RISK: MARKET,INTEREST RATE,AND FOREIGN EXCHANGE

Because of recent structural changes in the balance sheets of banks, regulatory changes in the risk-based capital requirements, and the recent adoption of mark-to-market accounting changes, interest rate risk remains an important issue for commercial banks and an important regulatory concern. Market, interest rate, and foreign exchange risk are estimated for a sample of commercial banks using ordinary least squares from 1986 to 1991. Consistent with earlier studies, the estimated coefficients continue to be unstable. We find that interest rate risk decreases and foreign exchange risk increases. Moreover, the results differ depending on practices of the bank (money center, superregional, or regional). We find evidence consistent with earlier studies that theorize foreign exchange risk is explained by unhedged foreign loan exposure.